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Colorado’s new EV state tax credits are fantastic

Colorado is trailblazing with a new law that ramps up impressive EV state tax credits for both purchases and leases.

Colorado’s new EV state tax credits

Governor Jared Polis (D-CO) signed House Bill 23-1272 into law on May 11. On page eight it says that from July 1, 2023, all Colorado residents who purchase or lease an EV with MSRP up to $80,000 qualify for an EV tax credit of $5,000. This tax credit will be in place until January 1, 2025, when the EV tax credit then begins to drop incrementally until 2029.

This is a big boost from the current $2,000 state EV tax credit for new EV purchases, and $1,500 for two-year leases.

Beginning January 1, 2024, EVs under $35,000 MSRP will be eligible for an additional tax credit of $2,500.

And sorry to be a Debbie Downer, but you can’t just cross state borders in order to get Colorado’s EV tax credit – you actually have to pay taxes in Colorado.

Electrek’s Take

Let’s say you want to buy a new Tesla Model Y Long Range with Dual Motor All-Wheel Drive. I’ve not added any extras when choosing the model, so the cost is $50,490 before state sales tax.

This model already qualifies for the federal tax credit of $7,500, and from July 1, it also qualifies for Colorado’s state tax credit of $5,000.

Top comment by Steve Bee

Liked by 15 people

I think the deal would be better if Colorado did an outright rebate, that way people that don't have enough income to owe $5000 in taxes can still benefit. Here in MA, the incentive is $3500 rebate from the state, regardless of one's MA state income tax liability.

View all comments

That drops the price down to $37,990, and some folks in Colorado may qualify for rebates from their utilities as well.

I simply can’t see how any gas cars within the Model Y’s price range could beat this deal of a $12,500 tax credit. Nice one, Colorado.

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Avatar for Michelle Lewis Michelle Lewis

Michelle Lewis is a writer and editor on Electrek and an editor on DroneDJ, 9to5Mac, and 9to5Google. She lives in White River Junction, Vermont. She has previously worked for Fast Company, the Guardian, News Deeply, Time, and others. Message Michelle on Twitter or at michelle@9to5mac.com. Check out her personal blog.